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Gemini, a cryptocurrency exchange, is set to return $1.1 billion to its customers after failing to conduct due diligence on a fraudulent third party, Genesis Global Capital.
The company plans to return over $1.8 billion in value, contributing $40 million to Genesis' bankruptcy conclusion.
This follows a charge last year by US regulators for illegally selling cryptocurrency assets via Earn, a platform launched in 2021.

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Gemini has been fined $37 million by NYDFS

Cryptocurrency exchange Gemini to return $1.1 billion to customers

By Dwaipayan Roy

Feb 29, 2024

12:13 pm

What's the story

Gemini, a cryptocurrency exchange co-founded by Tyler and Cameron Winklevoss, has agreed to return a minimum of $1.1 billion to its customers. The recipients are part of the company's now-defunct lending program, Gemini Earn. This decision comes as a result of a settlement with the New York Department of Financial Services (NYDFS), which also includes a $37 million fine for the company's "significant failures." The Earn program was shut down during a crypto market crash in November 2022.

Statement

'Settlement is a win for Earn customers'

NYDFS Superintendent Adrienne Harris explained that "Gemini failed to conduct due diligence on an unregulated third party, later accused of massive fraud, harming Earn customers who were suddenly unable to access their assets after Genesis Global Capital experienced a financial meltdown." Harris also mentioned that "today's settlement is a win for Earn customers, who have a right to the assets they entrusted to Gemini." If Gemini fails to return at least $1.1 billion, NYDFS may take further action against them.

Future

Gemini's efforts and future plans

In a recent blog post, Gemini stated that it has "worked tirelessly over the past 15 months to advocate for Earn users and seek the return of their assets." If the settlement is approved, the company will return more than $1.8 billion in value (based on current prices) — $700 million more than when Genesis stopped withdrawals on November 16, 2022. Additionally, Gemini will contribute $40 million toward the conclusion of Genesis' bankruptcy to benefit the affected Earn customers.

Legal

Gemini's legal troubles

In January last year, US regulators charged Gemini with illegally selling cryptocurrency assets to thousands of investors. The firm was accused of breaking the law by selling products via Earn, which was launched in 2021. The US Securities and Exchange Commission is handling the case. To note, Gemini's owners, the Winklevoss brothers are also engaged in a legal dispute with Meta and its chief Mark Zuckerberg.